“In the last month or so, the price has stabilized,”
Heffernan, a Melbourne-based client adviser with Austock, said
in a phone interview today. “There won’t be significant moves.
The trend of the price may gradually ease down, but it won’t
fall off a cliff.”

European governments are in talks to resolve the euro-area
debt crisis, with German Chancellor Angela Merkel and French
President Nicolas Sarkozy yesterday saying leaders may complete
work on their fiscal compact by Jan. 30, one month ahead of
schedule. Coordination between the European Central Bank and
governments suggests Europe’s sovereign-debt situation will
improve, Mohit Kumar, head of European interest-rate strategy at
Deutsche Bank AG in London, said yesterday.

“Europe seems to be settling down and the worst is behind
it, so the flow on effects to China should see less
volatility,” Heffernan said. “China will still perform well
economically and will be stable, so I don’t think we’ll see iron
ore prices either shoot through the roof or collapse.”

Iron ore with 62 percent content delivered to the port of
Tianjin traded at $140 a metric ton yesterday, unchanged from
Jan. 6 which was the highest price since Nov. 25, data from The
Steel Index Ltd. showed. Prices tumbled 31 percent in October in
the biggest monthly loss since December 2008, before rebounding
11 percent in November.

China’s steel output has dropped for six straight months,
falling to 49.8 million tons in November, according to data from
the World Steel Association. The cost of hauling iron ore and
coal fell to a four-month low, extending this year’s decline to
47 percent, amid concerns a slowdown in China will curb steel
production, the biggest driver of global shipping demand.

Still, China’s steel industry may rebound faster than in
other regions, which will be positive for iron ore and coal
because of the nation’s dependence on imports, Credit Suisse
Group AG said in a Jan. 5 report.